Bank Shareholders Exempt from Reporting 'Additional Holding Plans'... Financial Services Commission Approves Amendment to Supervisory Regulations

Reduction of Reporting Obligations for Bank Shareholders
Rationalization of Disclosure Standards for Providing Financial Benefits by Banks

[Asia Economy Reporter Kangwook Cho] From next year, the reporting obligation for bank shareholders' ‘future additional holding plans’ will be exempted. In addition, the amount scheduled to be provided will also be included in the disclosure threshold amount when providing property benefits by banks.

The Financial Services Commission announced on the 18th that it held a regular meeting and approved the amendment to the Banking Supervision Regulations containing these details.

According to this amendment, the future additional holding plans will be deleted from the reporting items for bank shareholders.

The Banking Act stipulates that when the same person holds more than 4% of bank shares or when the holding ratio changes by more than 1% thereafter, a report must be submitted to the Financial Services Commission.

The reporting items include matters related to the same person, status and reasons for shareholding or changes, purpose of shareholding, and involvement in bank management (Enforcement Decree of the Banking Act), as well as future additional holding plans (Banking Supervision Regulations), but this clause will be removed.

This is due to the fact that future additional holding plans are often uncertain, making the reporting ineffective, and that it is excessive compared to the law requiring ‘reporting necessary matters to confirm holding and change status’ (Article 15, Paragraph 2 of the Banking Act), as pointed out by the existing Regulatory Reform Committee.

However, in the case of shareholders of internet-only banks, it was decided to add whether they belong to a mutually invested business group under the Fair Trade Act to the reporting items. This is because, for internet-only banks, the holding limit for non-financial major shareholders varies depending on whether they belong to a mutually invested business group under the Fair Trade Act, and there is a supervisory need to grasp related status in advance.

Also, the disclosure threshold amount for providing property benefits will include the ‘amount scheduled to be provided.’

Currently, if a bank has provided ‘property benefits’ exceeding 1 billion KRW to a specific user in the last five business years, it is required to disclose this. However, since only the ‘provided amount’ is used as the standard, cases where future expenditures are confirmed due to multi-year contracts such as local government contributions are not disclosed, raising concerns about limitations in accurately informing the bank’s long-term soundness.

According to this amendment, the amount subject to disclosure when providing property benefits will include not only the ‘provided amount’ but also the ‘amount confirmed to be provided in the future.’

A Financial Services Commission official said, "While the reporting obligations of bank shareholders are being eased, it is expected that securing necessary supervisory information for internet-only banks will become easier." He added, "Also, by rationalizing the disclosure standards for property benefits provided by banks, it is judged that sufficient information will be provided to stakeholders such as bank shareholders, while limiting excessive contribution competition in the banking sector and contributing to enhancing soundness."

Meanwhile, this amendment is scheduled to be implemented from January 1 next year after going through the amendment procedures for the related Enforcement Rules of the Banking Supervision Regulations.

This content was produced with the assistance of AI translation services.